SA’s 2018 Crime statistics & the economy (1)

SA is increasingly deteriorating into a combination of the Wild West and a Mafia state with Government incapable of keeping crime in check. Minister Beki Cele admits “the ball was dropped” but remains adamant that “(w)e haven’t reached a state of lawlessness in South Africa and we won’t”.

The South African population begs to differ: Crime pays… and quite handsomely as well.

The returns on crime far exceeds returns on long-term investment in blue chip stocks. South Africans’ trust in and reliance on the police is scarcer than icebergs in tropical oceans. And inefficient policing doesn’t only kill the economy: it kills justice as well.

There is an intriguing symbiosis between cities and towns on the one hand and enterprises on the other. As the world population urbanise, so are business activities.

Physicist Geoffrey West in his “Scale: The Universal Laws of Life, Growth and Death in Organisms, Cities and Companies” says based on city growth one can state precisely what will happen with the number of businesses in that city: a doubling of population does not require a doubling of grocery stores or filling stations, economies of scale kick in in a predictable manner. The reverse is also true.

Unfortunately, South Africa’s economic and enterprise development policies and strategies ignore these predictable realities. In addition, LED plans by municipalities in the main demonstrate a lack of understanding of what drives development.

Author: Frederick Fourie

President Cyril Ramaphosa aims to set the country on a new path of growth, employment and transformation. Key to this are action plans for employment creation, to be deliberated at a jobs summit.

A new edited volume, published by HSRC Press, flags the importance of explicitly addressing the informal sector in such initiatives, given the key role it plays in providing paid employment and reducing poverty. The book is based on research done in the Research Project for Employment, Income Distribution and Inclusive Growth (REDI3x3).

This research shows unambiguously that the informal sector is an important source of employment (and of paid employment), with a growing propensity to employ. Regrettably, for many decades the sector has remained forgotten or, at best, in the margins of economic analysis and policy consciousness. Many policy makers appear to group it together with formal SMMEs. Such an approach risks missing key elements of the ‘forgotten’ world of informal enterprises – their potential, the constraints they face, their particular vulnerability, and the policy support they need to be viable and self-standing.

500 Years after Martin Luther hammered his 95 theses to a church door in Wittenburg, Davide Cantoni, Jeremiah Dittmar and Noam Yuchtman saved their theses to the internet: Beliefs have economic consequences.

Old news, one might say, recalling Weber. But Weber’s thesis was always contested: assumptions of cultural traits based on unreliable statistics from the 19th C. Cantoni, Dittmar and Yuchtman (further-on Cantoni and co.) offer hard micro-statistical evidence from the century when Luther protested against Papal authority : 1517 was a watershed year in how people viewed the world and those (world)views had economic consequences.

In a National Bureau of Economic Research Working Paper ofOctober 2017 they state: “the pre-Reformation era can be understood as an equilibrium in which a monopolist religious producer (the Catholic Church) provided political legitimacy to secular authorities at a high price—charged in the form of control over resources, tax exemptions, and some degree of political power. The Reformation represented a competitive shock in the market for salvation. Protestant reformers offered a popular, lower-cost alternative to the Catholic Church… This had implications for the allocation of resources between secular and religious uses…” Continue reading “The economic consequences of Luther: Ideas have legs, but some come with leg-irons”→